Finalyse - Composing Solutions for Finance

Solvency II: Ultimate Forward Rate Will Decrease to 3.65%

Finalyse - Composing solutions for Finance

On 5 April 2017, the European Insurance and Occupational Pensions Authority (EIOPA) has published the long-sought methodology to derive the Ultimate Forward Rate (UFR). According to the principles laid out in Solvency II, the UFR should be stable over time and only be adjusted in case of changes in long-term expectations about interest rates and inflation. The calculated value of the UFR for the euro of 3.65% will be phased-in with a first decrease from the current 4.2% to 4.05% in 2018. Annual changes to the UFR will amount to maximum 15 basis points. The new methodology applies as from January 2018. Finalyse experts support insurance companies with risk management and ALM implementation – click here to find out more!

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